[2025] Pass NMLS MLO Test Practice Test Questions Exam Dumps
Verified MLO dumps Q&As - MLO dumps with Correct Answers
NEW QUESTION # 131
When does the Loan Estimate expire?
- A. After the 5th business day
- B. After the 7th business day
- C. After the 3rd business day
- D. After the 10th business day
Answer: D
Explanation:
Under TILA-RESPA Integrated Disclosure (TRID) rules, the Loan Estimate (LE) expires after 10 business days from the date it was provided, unless the borrower indicates an intent to proceed with the loan. If the borrower does not confirm their intent within 10 business days, the terms and costs in the Loan Estimate are no longer valid, and the lender may issue a new estimate with updated terms.
References:
TRID Rule - Loan Estimate Expiration
12 CFR Part 1026 (Regulation Z)
NEW QUESTION # 132
Which of the following applicant characteristics is legally permitted to be considered in evaluating credit risk?
- A. Whether the alimony payments the applicant relies on for income are likely to continue and to be consistently made
- B. Whether the applicant has a phone number listing in their name
- C. Whether the applicant's age makes them ineligible for credit-related insurance
- D. Whether the applicant seems likely to have children
Answer: A
Explanation:
Lenders may consider whether alimony, child support, or separate maintenance payments are likely to be consistently made, as this affects the borrower's ability to repay. Consideration of family status, phone listings, or age (except as required for legal capacity) is prohibited by the Equal Credit Opportunity Act (ECOA).
"A creditor must consider alimony, child support, or separate maintenance income to the extent that it is likely to be consistently received."
- 12 CFR § 1002.6(b)(5), Regulation B (ECOA)
References:
CFPB, Considering Alimony and Child Support
SAFE MLO National Test Study Guide
NEW QUESTION # 133
Which of the following fees is a finance charge?
- A. An origination fee
- B. A notary fee
- C. An appraisal fee
- D. A late payment fee
Answer: A
Explanation:
An origination fee is considered a finance charge under TILA because it represents the cost of obtaining credit. A finance charge includes all fees that a borrower must pay as a condition of securing a loan, excluding certain exempt fees like notary or appraisal fees.
* Notary fees (A) and appraisal fees (C) are typically excluded from the finance charge calculation.
* Late payment fees (D) are not considered finance charges; they are penalties for delinquent payments.
References:
* Truth in Lending Act (TILA), 12 CFR §1026.4 (Regulation Z)
* CFPB Finance Charge Definitions
NEW QUESTION # 134
A consumer with HIV/AIDS is protected from lending discrimination by the:
- A. Employment Non-Discrimination Act
- B. Equality Act
- C. Dodd-Frank
- D. Fair Housing Act
Answer: D
Explanation:
The Fair Housing Act prohibits discrimination in housing based on disability. Federal courts and HUD have consistently ruled that HIV/AIDS qualifies as a disability under the Act.
"The Fair Housing Act prohibits discrimination in housing based on disability, including HIV/AIDS."
- U.S. Department of Justice; HUD Fair Housing Act Overview
References:
HUD, Housing Discrimination and Persons with HIV/AIDS
DOJ, The Fair Housing Act
NEW QUESTION # 135
Which of the following must be included on all residential mortgage loan application forms?
- A. The maiden name of the borrower's mother
- B. A mortgage loan originator's unique identifier
- C. A borrower's driver's license number
- D. The borrower's previous five year employment history
Answer: B
Explanation:
Regulation Z (TILA) and the SAFE Act require that all mortgage loan applications include the MLO's unique identifier, which allows regulators and consumers to identify the MLO involved in the transaction.
"Each loan application must include the mortgage loan originator's name and unique identifier."
- 12 CFR § 1026.36(g); SAFE Act
Other listed information is not federally required on every mortgage application.
References:
CFPB, Loan Originator Identifier Requirements
SAFE MLO National Test Study Guide
NEW QUESTION # 136
A veteran borrower obtains a VA loan to purchase a property for $200,000 and opts to finance the entire purchase price plus the VA funding fee of 2.15%. The initial payment for principal and interest will be calculated based on a loan amount of:
- A. $200,000
- B. $204,300
- C. $200,000 plus lender's attorney fees
- D. $204,300 plus lender's attorney fees
Answer: B
Explanation:
The VA funding fee can be financed into the loan amount. The fee is calculated as a percentage of the base loan ($200,000 x 2.15% = $4,300). The total loan amount is thus $204,300.
"The VA funding fee may be included in the loan. The total loan amount is the base loan plus the funding fee."
- VA Lender's Handbook, Chapter 8: Loan Approval and Closing
References:
VA Lender's Handbook, Chapter 8
CFPB, VA Loan Funding Fee
NEW QUESTION # 137
An individual who is a loan processor or underwriter must maintain a state originator license if they:
- A. are an independent contractor and collect, receive or distribute information in connection with making a credit decision.
- B. are an employee of a loan processing or underwriting company that supports a mortgage broker/lender and only perform supervised clerical duties.
- C. are not in communication with the consumer to obtain mortgage loan information.
- D. perform clerical duties for a mortgage lender as a supervised employee
Answer: A
Explanation:
An individual who is an independent contractor and performs loan processing or underwriting activities must maintain a state originator license if they collect, receive, or distribute information in connection with making a credit decision. This is because independent contractors are not considered supervised employees, and their work directly impacts the loan approval process.
* In contrast, employees of a mortgage lender who perform clerical duties (A) under supervision do not need a state license, nor do those who do not interact with consumers (B).
References:
* SAFE Act, 12 USC §5101
* NMLS Licensing Guidelines for loan processors and underwriters
NEW QUESTION # 138
In a federally related mortgage loan on a principal dwelling, which of the following parties has the right to rescind the transaction?
- A. Only the person who will actually occupy the property
- B. Only the borrower with the majority interest in the transaction
- C. Only the borrower who makes the most income
- D. Any person who has an ownership interest in the property
Answer: D
Explanation:
Under TILA's Right of Rescission, in a federally related mortgage loan (such as a refinance) secured by a primary residence, any person who has an ownership interest in the property has the right to rescind the transaction within three business days after the closing, delivery of the notice of right to rescind, or delivery of all material disclosures, whichever occurs last.
This right applies to all individuals with a legal interest in the property, not just the primary borrower or the person who will occupy the property. This ensures that all owners can consent to the mortgage terms.
References:
* Truth in Lending Act (TILA), Section 125
* Regulation Z, 12 CFR §1026.23
NEW QUESTION # 139
The SAFE Act defines a nontraditional mortgage as all of the following except:
- A. An interest-only mortgage.
- B. A 30-year fixed rate mortgage with a 25% down payment.
- C. 15-year mortgage with an interest rate of 10%.
- D. A payment option ARM with a down payment of 5%.
Answer: B
Explanation:
The SAFE Act defines a "nontraditional mortgage" as any loan product other than a 30-year fixed-rate mortgage. Nontraditional loans include adjustable-rate mortgages (ARMs), interest-only loans, payment option ARMs, and other products with features outside the standard fixed-rate structure.
"Nontraditional mortgage product means any mortgage product other than a thirty-year fixed-rate mortgage."
- SAFE Act, 12 USC § 5102(7); NMLS UST Outline
Thus, the 30-year fixed-rate mortgage with a 25% down payment is not nontraditional; all the other examples are.
References:
SAFE Act, 12 USC § 5102(7)
SAFE MLO National Test Study Guide
NEW QUESTION # 140
Which of the following responses describes the loan-to-value ratio when buying a home?
- A. The loan amount divided by the appraised value
- B. The total loan amount, plus closing costs, divided by the appraised value
- C. The loan amount divided by the lesser of the appraised value or the sales price
- D. The total loan amount, plus mortgage insurance, divided by the appraised value
Answer: C
Explanation:
The loan-to-value (LTV) ratio is calculated by dividing the loan amount by the lesser of the appraised value or the purchase price of the property. This protects lenders from over-lending on a property that may have a sales price above its actual market value.
"The loan-to-value ratio is calculated by dividing the loan amount by the lesser of the appraised value or sales price."
- Fannie Mae Selling Guide; SAFE MLO National Test Study Guide
References:
Fannie Mae, LTV Ratio Definition
NEW QUESTION # 141
Which of the following duties requires licensure under the SAFE Act?
- A. An individual who performs processing and underwriting duties at the direction of and subject to the supervision of a licensed individual
- B. An individual who offers or negotiates terms of a residential mortgage loan for compensation or gain
- C. An individual who performs administrative or clerical tasks on behalf of a mortgage loan originator
- D. A licensed and registered real estate broker performing real estate brokerage activities
Answer: B
Explanation:
Under the SAFE Act, an individual must be licensed as a mortgage loan originator (MLO) if they take a residential mortgage loan application and offer or negotiate terms for compensation or gain. Activities such as only performing clerical or support duties, or acting solely as a real estate broker in their normal capacity, do not require an MLO license.
"The term 'mortgage loan originator'... means an individual who (i) takes a residential mortgage loan application; and (ii) offers or negotiates terms of a residential mortgage loan for compensation or gain."
- SAFE Act, 12 USC § 5102(4)
References:
SAFE Act, 12 USC § 5102(4)
NMLS Uniform State Content Outline
NEW QUESTION # 142
Under the TILA-RESPA Integrated Disclosure rule (TRID), what is the minimum time period that must pass between a borrower's receipt of a Loan Estimate and the closing of a mortgage loan?
- A. 30 business days
- B. 15 business days
- C. 7 business days
- D. 45 calendar days
Answer: C
Explanation:
Under the TILA-RESPA Integrated Disclosure (TRID) rule, the borrower must receive the Loan Estimate (LE) at least 7 business days before the closing (also called consummation) of the mortgage loan. This rule ensures that the borrower has sufficient time to review and understand the loan terms and costs.
The 7-day waiting period starts from the day the Loan Estimate is delivered or placed in the mail. This period allows the borrower to ask questions and possibly negotiate terms before finalizing the mortgage.
References:
* TILA-RESPA Integrated Disclosure Rule (TRID), 12 CFR §1026.19(e)
* Consumer Financial Protection Bureau (CFPB) Guidelines
NEW QUESTION # 143
Which of the following responses best describes redlining?
- A. The identification of locations in which the lender will not lend
- B. The identification of low and moderate income census tracts
- C. The identification of minority census tracts
- D. The analysis of the points and fees charged on loan transactions
Answer: A
Explanation:
Redlining is the illegal practice of refusing to lend or offering less favorable terms to residents of certain geographic areas, often based on the racial or ethnic composition of those areas.
"Redlining is the practice of denying or restricting financial services to certain neighborhoods based on race or ethnicity."
- CFPB, What is redlining?
References:
CFPB, What is redlining?
SAFE MLO National Test Study Guide
NEW QUESTION # 144
Which of the following responses best defines a red flag?
- A. Effective oversight by lenders to prevent borrower identity theft
- B. Proof that specific activity shows identity theft
- C. Reasonably foreseeable risk taken by borrowers to prevent identity theft
- D. A pattern, practice or specific activity that indicates the possible existence of identity theft
Answer: D
Explanation:
A red flag is a pattern, practice, or specific activity that indicates the possible existence of identity theft. The Red Flags Rule requires financial institutions and creditors to develop and implement programs to detect, prevent, and mitigate identity theft.
"Red flags are patterns, practices, or specific activities that indicate the possible existence of identity theft."
- FTC, Red Flags Rule: Identity Theft Prevention Program
References:
FTC, Red Flags Rule
SAFE MLO National Test Study Guide
NEW QUESTION # 145
Which of the following fees or charges is an allowable closing cost typically found on a Closing Disclosure?
- A. Servicing fee
- B. Referral fee
- C. Yield-to-loan fee
- D. Origination charge
Answer: D
Explanation:
An origination charge is an allowable closing cost typically found on the Closing Disclosure (CD). This fee is charged by the lender for processing the mortgage application and creating the loan. It may include administrative fees, underwriting fees, and other costs related to loan origination.
* Referral fees (B) are illegal under RESPA.
* Servicing fees (C) are not typically listed as closing costs but are part of ongoing loan maintenance.
* Yield-to-loan fees (D) are not a standard item on a Closing Disclosure.
References:
* TILA-RESPA Integrated Disclosure (TRID) Rule
* RESPA (Real Estate Settlement Procedures Act) Section 8
NEW QUESTION # 146
A mortgage loan originator (MLO) is in the process of taking an application for a 30-year mortgage, and the borrowers are over 72 years old. Which of the following actions must the MLO take?
- A. The MLO must present them with a reverse mortqaqe.
- B. The MLO must present them with a home equity line of credit (HELOC).
- C. The MLO must inquire about the ability to repay in the event of a borrower's death.
- D. The MLO must complete the application and proceed as normal.
Answer: D
Explanation:
Under the Equal Credit Opportunity Act (ECOA), age cannot be a basis for discrimination in the loan application process. If borrowers are over 72 years old, the MLO must complete the application and proceed as normal, treating them the same as any other applicant. The MLO should not make assumptions about the borrowers' needs, such as automatically suggesting a reverse mortgage (A) or a home equity line of credit (B).
Similarly, there is no obligation for the MLO to inquire specifically about the borrower's ability to repay in the event of death (D), as this would be age discrimination.
References:
Equal Credit Opportunity Act (ECOA), 15 U.S.C. §1691
CFPB Guidelines on age and lending practices
NEW QUESTION # 147
If a borrower only receives commission pay for 18 months, which of the following actions should a mortgage loan originator (MLO) take?
- A. Take the application but tell the borrower that they will need a cosigner
- B. Tell the borrower they need a steady income and not one that fluctuates
- C. Take the application because positive factors may offset the short income history
- D. Tell the borrower to come back in 6 months when they will have 24 months of commission pay
Answer: C
Explanation:
Standard guidelines recommend a 2-year history of commission income to count it as qualifying income.
However, lenders may consider a shorter history if there are positive factors to offset the shortfall. MLOs should always take the application and allow underwriting to review the overall credit risk.
"Generally, a minimum history of two years is recommended for commission income, but a shorter period may be considered with compensating factors."
- Fannie Mae Selling Guide, B3-3.1-05: Secondary Employment Income
References:
Fannie Mae, Commission Income Requirements
SAFE MLO National Test Study Guide
NEW QUESTION # 148
A borrower's monthly debt-to-income ratio is calculated by taking the:
- A. eligible total monthly debt obligations for trade lines greater than 12 months multiplied by the borrower's net monthly income.D eligible total monthly debt obligations excluding the monthly housing expense divided by the borrower's net monthly income
- B. borrower's gross monthly housing expense divided by the principal, interest, and appraised value.
- C. eligible total monthly debt obligations, including the monthly housing expense, divided by the borrower's gross monthly income.
Answer: C
Explanation:
The debt-to-income (DTI) ratio is a key metric used by lenders to assess a borrower's ability to manage monthly payments and repay a mortgage. It is calculated by dividing the borrower's total monthly debt obligations, including:
* Monthly housing expenses (principal, interest, taxes, and insurance, also known as PITI).
* Any other recurring debt obligations (car loans, student loans, credit card payments, etc.).
This total is divided by the borrower's gross monthly income (before taxes and deductions). This calculation helps determine whether the borrower meets lending standards, with most lenders preferring a DTI ratio below 43% for qualified mortgages.
References:
Fannie Mae and Freddie Mac guidelines on debt-to-income ratio
CFPB Qualified Mortgage Rules
NEW QUESTION # 149
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